Gold Is Getting Ready to Follow in Junior Miners' Footsteps / Commodities / Gold and Silver 2022
As junior miners continue to rise andthe USD keeps falling, it seems like a matter of a short time before goldsoars. It only needs a proper trigger.
Gold is doing pretty much nothing thesedays, but junior miners tell us what gold’s going to do next. It’s most likelyto rally in the short term.
Why? Because the mining stocks tend tolead gold higher and lower, and looking at the relative performance of bothparts of the precious metals sector, we see that this time, miners are alreadymoving higher, while gold is getting ready to follow in miners’ footsteps.Let’s take a closer look at what junior miners (the GDXJ) did recently.
In short, junior miners managed to breakabove their declining short-term resistance line, and they closed above it forthe second consecutive day. If they stay above it today (which is highlylikely), the breakout will be confirmed. This is a very bullishindication for the short run.
This is especially the case since ithappened shortly after the GDXJ refused to break below the $30 level – rallyingback above it after a daily close slightly below it. The invalidation of thetiny breakdown itself was a bullish sign, not to mention that the very bottom –the daily reversal – materialized in huge volume.
The above chart is bullish for the shortrun, and please note that junior miners are now well above their early-Julybottom.
Gold, on the other hand, is not above itsearly-July low. It’s barely up from its July 14 bottom.
The RSI remains very oversold, suggestingthat gold hasn’t started its rally just yet, but that it remains poised to soar.After all, in RSI terms, gold is now more oversold than it was at its 2020bottom.
Speaking of 2020, gold recently bottomedpractically right at its early-2020 high. To be clear, it was one of the levelsthat created strong support close to the $1,700 level. Either way, this meansthat gold is likely to rally any day now.
So, what is gold waiting for? Why isn’tit rallying, especially given that the USD Index is declining and the EUR/USDcurrency pair is rallying?
As a reminder, the EUR/USDpair reversed in a profound way after trying to break below theall-important 1 level. For a brief moment, the U.S. dollar was more expensivethan the euro, and it triggered a reversal, just as I had indicated.
The answer to the why-not question couldlie in Europe. More precisely, in the Eurozone and thisweek’s interest rate decision, which is due tomorrow (Thursday, July21). It’s not a matter of what will or will not be said and done. It’s a matterof the uncertainty that will be present until it’s known what the status is(for now). Based on that, we could see some chaotic price movement on anintraday basis. However, once a decision is made and the markets know what’sgoing on, the traders might finally want to enter the trades that they are nowallowing themselves to enter right now, adopting the wait-and-see approach.
Please note that the above is just one ofthe possible triggers forgold price moves, and it could actually be something else thatdirectly triggers the move. What it will be is of relatively small importance.What is much more important is the pressure that has built up for gold torally. The USDX decreased, and junior miners are already moving higher. The RSIbelow 30 is like a coiled spring, just waiting to expand rapidly. Given the ECB’slooming decision, it seems that we won’t have to wait long for gold to finallymove and correct some of its recent declines.
All in all, it looks like the preciousmetals sector is going to rally and probably top close to the end of this monthas the USD Index pulls back after a sizable rally.
Thank you for reading our free analysistoday. Please note that the above is just a small fraction of today’sall-encompassing Gold & Silver Trading Alert. The latter includes multiplepremium details such as the target for gold that could be reached in the nextfew weeks. If you’d like to read those premium details, we have good news foryou. As soon as you sign up for our free gold newsletter, you’ll get a free7-day no-obligation trial access to our premium Gold & Silver TradingAlerts. It’s really free – sign up today.
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Toolsfor Effective Gold & Silver Investments - SunshineProfits.com
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